Powwow on federal system needed – Palace

Published August 10, 2018, 1:51 PM

by iManila Developer

By Argyll Cyrus Geducos and Chino Leyco

Malacañang has highlighted the importance of a healthy dialogue to immediately iron out contentious issues as the government pushes for a shift to a federal government.

Presidential Spokesperson Harry Roque (MANILA BULLETIN)
Presidential Spokesperson Harry Roque

Presidential spokesman Harry Roque made the statement after Consultative Committee (ConCom) member Father Ranhilio Aquino called on President Duterte to fire Finance Secretary Carlos Dominguez III and Socioeconomic Planning Secretary Ernesto Perniafor airing their concerns about federalism.

“If he (Duterte) favors federalism, let him sack Dominguez and Pernia or command them to keep their traps shut,” Aquino said in a Facebook post.

Aquino’s statement came after Dominguez said the draft charter was confusing while Pernia said the shift would wreak havoc on the economy.

Roque said the Palace welcomes Aquino’s concerns and acknowledges his passion and hard work in contributing to the drafting of the federal charter.

“We view the differences of opinion on federalism as part of the continuing discourse, even among members of the President’s official family, which the Chief Executive encourages to thresh out possible contentious issues,” he said.

Aquino said Duterte may have grown lukewarm to federalism for allowing Dominguez and Pernia to speak against federalism.

“The President, as we all know, has long been an advocate of federalism and his policy has always been one of inclusive participation of various groups and sectors,” Roque said.

Malacañang assured that all Cabinet officials support the push for federalism and Roque said it is now incumbent on upon them to make it happen.

“The President will have to task them, because the President as, you know, the principal of all the alter egos of the President has said that he is pushing for federalism. So it is incumbent upon the alter egos to find ways and means now to make that happen,” Roque said.

Roque surmised that Cabinet members are speaking out because they have unanswered questions about the charter change.

“What they were objecting to is because they have unanswered questions on the existing proposals made by the consultative committee, so let’s find answers. But if there are no answers, it is incumbent for alter egos of the President to make what the President wants to happen reality,” he added.


Meanwhile, Finance Secretary Carlos G. Dominguez III on Friday said President Duterte was properly briefed about the funding and spending implications should the current draft of the federal Constitution is adopted and implemented.

Ahead of the Senate hearing where Dominguez warned that the country’s investment grade credit ratings “will go to hell” if the draft federal charter is approved, the finance chief said that he and President Duterte already discussed the fiscal problems in the proposal.

“PRRD [President Duterte] now has a good appreciation of this draft’s fiscal implications,” Dominguez replied when asked about the reaction of the President after their meeting.

While Dominguez assured that the whole economic team is backing the proposed federated government, the finance chief maintained that the draft Constitutions needs further discussions as it has “dire, irreversible economic consequences.”

Dominguez said that there is urgency in “opening more discussions on this proposed document crafted by the Consultative Committee (Con-Com) tasked to review the 1987 Constitution.”

The finance chief pointed out that the draft federal charter contains “ambiguous provisions” on the allocation of government expenditures for the would-be federated government and its federated regions.

“We welcome a discussion on the draft so that it is clear and unambiguous. We do not want the revenue assignment and the expenditure assignment to be misunderstood, as what happened in the recent case involving the Internal Revenue Allotment,” Dominguez said.

The economic manager, in particular, noted that while the 50:50 provision on revenue sharing is part of the proposed Constitution, the other aspect of a federated government, which is the spending responsibility, was not mentioned in the draft.

The draft Constitution also enumerated the exclusive powers of the Federal Government and the Federated Regions but is silent on the funding source for the exercise of these powers, Dominguez noted.

“As we pointed out earlier, we never stated that we are against federalism. Rather, with respect to the fiscal provisions of the proposed Constitution, there are ambiguous provisions on revenue assignment and there are no provisions on expenditure assignment,” the finance chief said.

“There are, likewise, principles on revenue sharing that do not appear to be well studied,” he added.
He said that given these ambiguities, “it is our duty and responsibility to point these out and engage in a healthy, level-headed discussion, especially when the

possible repercussions could result in dire, irreversible economic consequences.”

“We believe that these should be set out clearly so that they adhere to the principle that ‘funds follow function and ‘funds follow program,” Dominguez added.

Dominguez said that based on the fiscal provisions of the draft federal Charter, the federal government would incur a budget deficit of 6.7 percent, which may result in a credit rating downgrade for the Philippines, which currently enjoys an investment-grade rating.

A credit rating downgrade would lead to higher interest rates, Dominguez pointed out.

To avoid this negative economic consequence and maintain the current deficit target of three percent, Dominguez said “the Federal government will have to cut its expenditure program by P560 billion.”

“This means the national government may have to lay off 95 percent of its employees, or reduce the funds for the ‘Build, Build, Build’ program by 70 percent, or a combination of both,” he explained.

The finance chief however expressed dismay over the call of Aquino for President Duterte to fire him Pernia for stating their views on the proposed federal Charter.

“We respect the opinion of Fr. Aquino, but we believe that such attitude would not enrich the level of discourse on the proposed Constitution,” Dominguez said.